A Template for Shaping Disruptive Ideas
New market disruptions follow a remarkably consistent pattern, regardless of the type of industry or the era in history when the disruption occurred. Here is a template managers can use to identify promising new customers and markets, and shape nascent ideas into disruptions that drive profitable growth:
Target nonconsumption. Look for a set of consumers who are trying to get a job done, but because they lack the money or skill, a simple, inexpensive solution has been beyond reach. Powerful competitors will typically ignore you, because you’re targeting customer they consider unattractive.
Example: When Sony introduced the world’s first battery-powered, pocket transistor radio in 1955, it targeted the product not to the buyers of tabletop radios (produced by giant electronics companies like RCA)—but to a huge segment of the music-loving marketplace who couldn’t afford to buy tabletops: teenagers.The beautiful thing about competing against non-consumption is that in order to delight your customers, your product needs only to be better than nothing.
Leverage the low performance hurdle. Since these new customers compare the disruptive product to having nothing at all, they are delighted to buy it even though it may not be as good as other products available.
Example: Compared with the vacuum tube tabletop radios, the sound from Sony’s transistor was tinny and static-laced. But teenagers didn’t mind. Infact, they were thrilled to buy it, because it was cheap, and because it enabled them to listen to their rock and roll music in a new venue: out of the earshot of their parents.
Make it “foolproof.” Deploy technology not to make the product more sophisticated, but rather to make it as “foolproof” as possible so that customers with less money and little training on the product can begin using it.
Example: The personal computer enabled everyday people who lacked degrees in engineering and computer science to begin computing for themselves. Whenever hardware and software have made sophisticated and difficult applications more foolproof, it has created new waves of growth.
Lock in and take over. As a new value network forms around the new consumer market, certain channel partners will come to depend on your product to fuel their own need for disruptive growth. In addition, consumers will begin to use the product in new venues. Over time, the disruptive product will improve in quality, attract more customers, and take over the leadership position in that category.
Example: Vacuum tube-based appliances were sold through appliance stores that made most of their profits replacing burned out vacuum tubes in the products they sold. Sony’s transistors had no vacuum tubes, so the company had to create a new channel through which to sell their product. These were chain stores like F.W. Woolworth and discount retailers like K-Mart, who were previously unable to sell radio and televisions because they couldn’t service them. The channel partnerships were win-win, because each was helping the other to succeed on their disruptive path. By the time RCA and other big competitors realized the threat, the shelf space at these new channel distributors was taken—and so was the market share.
(Source: The Innovator’s Solution, Harvard Business School Press, 2003)
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